Seattle's HomeStreet, a savings bank, has been under supervisory restrictions with its financial statements clouded. It has a plan: launch an IPO to raise capital. Some watchers have doubts.

Don't go broke—go public. As if to demonstrate the truth of the old saw, HomeStreet, a Seattle community savings bank under heavy supervisory restriction, its financial statements qualified on a going-concern basis, seems bent on doing an initial public offering.

The 90-year-old franchise functioned as the private domain of generations of Seattle's Williams clan, whose members still sit on...